Question

‘accountability’ in financial report

1. In the context of public sector, whether the objective of financial reporting should focus more on 'accountability' that compared to 'decision making' ?

2. What are the information in public sector financial reports need to be provided to to the users?

Answer 1

Answer 1

In the context of public sector, the objective of financial reporting should focus more on 'accountability' in comparison to 'decision making' as it assists in enhancing the performance and building trust in public sector, as accountability facilitates openness and transparency in business operations. As Public entities are accountable to the contributors of capital or funds as well as to the receivers of the goods and services, hence it is of utmost importance to have accountability in business functions of public sector.

Answer 2

The information in public sector financial reports that need to be provided to the users is as follows:

• Financial performance in terms of gross profit and net profit.
• Financial position showing value of assets and liabilities.
• Changes in net worth in an accounting period.
• Cash flows from operating , investing and financial activities
• Type of goods and services delivered by the entity;
• Objectives achieved by the entity in monetary and non monetary terms.
• Details of revenue and expenses of the business unit.
• Level of assets owned and the liabilities owed;
• Information regarding shareholders’ equity and retained earnings.
• Any other information as a part of financial statement or footnote that may help users to better comprehend the financial position and performance of the business entity.